Boeing reduces quarter's earnings

By Peter Pae
Los Angeles Times

Boeing Co. said yesterday its first-quarter net earnings will be reduced by $994 million, or $1.23 a share, mainly because of an accounting charge to reflect the sharply declining value of companies it acquired over the past seven years.

As a result, analysts estimate the Chicago-based aerospace and defense giant could post a net loss for the first quarter, contrasted with initial estimates that Boeing would earn about 42 cents a share. Boeing expects to report results April 23.

Boeing made the announcement after the stock markets closed.

Analysts said investors may not react too strongly to the news, because Boeing took a similar charge last year because of accounting changes.

The company said $853 million of the latest charges reflect a continuing drop in the value of Boeing's stock, which was used to acquire various companies, including McDonald Douglas and the satellite unit of Hughes Electronics.

Battered by a slump in sales of planes and satellites, Boeing shares have dropped almost 40 percent since the Sept. 11 attacks.

In addition to the writedown for goodwill, the $994 million charge against earnings also includes $159 million, or 20 cents a share, to boost reserves in its financing unit. With the slump in air travel, airlines have been taking aircraft financed by the Boeing unit out of service, reducing their value. At the same time, Boeing has had to reduce lease rates on operating aircraft.